WHEN SHOULD I SELL MY EC

Executive condo was first introduced in Singapore, as a hybrid of public and private property.

It is catered to the sandwiched class whose income is not more than $16,000 (started from $12k to $14k then to $16k).

EC are physically very similar to condo, they are designed and built by private developers and it provides similar facilities like swimming pool, gym, tennis courts, clubhouse, etc. But EC are priced very much lower than private condos, they are usually cheaper by around 20% range.

If you have purchase a EC in the past, you will be asking the question “When should I sell my EC”.

Technically, all EC owners can sell their EC the moment it reaches the MOP Minimum Occupation period of 5 years, from the TOP date. Their expected property paper gain should be more than $200,000, but this is just a paper gain if you don’t sell it and convert it into real profits.

AVERAGE PRICE (PSF) OF NEW EXECUTIVE CONDOS. (Source : Squarefoot Singapore)

An example : If Peter , owner of an EC in Twin Waterfalls would have made at least 24% paper gain

Executive condominiums (ECs) are always in hot demand, according to records many resale EC have already or almost attained their MOP.

ECs that have attained their MOP of 5 years, can now be rented out as a whole unit and also can be resold to anyone except foreigners.

Many owners who want to upgrade or to realise their paper gain , will sell their EC after MOP. At the same time, usually there is also a big pool of buyers waiting for resale ECs, since new launch EC are few and usually higher price.

These new potential buyers are also eyeing the potential when these EC reach 10 years MOP, meaning it could be sold in open market to anyone, usually also means higher capital appreciation.

With this large pool of sellers and prospective buyers of EC, we can be sure EC will be top in resale condo transactions.So if you ask when to sell your EC, this could be a good time too.

It is a good time to strategise and consider these options before acting.

CHOOSE A RIGHT STRATEGY

1) Decoupling or Part Purchase, this is done to free up one partner name to purchase another property for investment. Can be a new launch condo or a resale condo. This is recommended if you don’t intend to sell in the near future

2) Sell EC and buy another private property in a better location or buy a bigger unit with more rooms.

3) Sell EC and then downgrade to a HDB resale flat, with this option you will free up lots of cash, ideal if you are planning on retirement.

4) Sell EC and then buy another 2 condo, one under each name. You can reserve the bigger unit for own stay and use the smaller unit for investment rental income. Choose this option if you have fairly high income, (around $10k), a really comfortable budget for mortgage and at least 20 year investment horizon.

As most buyers of resale property are looking for relatively younger condo, your EC after MOP is only 5 years old, it is very attractive to homebuyers, and it may fetch a better price.

Because you made the right move in owning a EC, you can ride this wave and you can sell and cash out at the most optimum price at the youngest property age.

But first you may need to ask yourself why you should sell right after MOP instead of waiting until full privatisation at the 10th year mark.

1. Is it herd instinct of following others, do not let others influence you to cash out.
2. Are you afraid of future profits, that you may not achieve it due to COVID or other economic issues.
3. Are you considering other investment property opportunities, (like sell 1 buy 2) after selling the EC

If you are selling your EC now, you have to consider these important factors

1. Are there many neighbouring units selling in your EC project?

Generally, if your EC project is a large development, then there is a high chance many will want to sell when their EC reaches MOP, and cash out.

Usually in such case, at the initial stage buyers will have ample choices to select and urgent sellers will likely sell cheaper to offload the unit. And after a period of 6 months or more, stabilisation will settle and the sellers subsequently will get better prices as competition thins.

2. What is the current supply situation of newly TOP (Temporary Occupation Permit) condominiums in your area?

For private properties , they don’t need to fulfil MOP, owners can sell their property upon TOP of the project. Therefore you need to monitor the supply of newly TOP condos in your area as it will mean increasing the competition pool. Buyers will have more choices.

The ideal situation for you , as a MOP EC seller, is to have a neighbourhood of old condos as well as a neighbourhood of HDB BTO flats that also just MOP five years.

As HDB BTO upgraders will be looking at private condo or ECs to upgrade, this will add to demand for your resale EC , especially so as it is near or in their familiar area.

Case in point:
Many Yishun BTO flats in Yishun Greenwalk and Adora Green has reached MOP and many have upgraded to private homes, and The Canopy EC in Yishun is also sought by these buyers.

Eg. Tampines Trilliant at Tampines Ave 7, total 670 units
Many EC resale owners are asking for $1,250,000 for their 3 bedroom.
Surrounding HDB in Tampines St 71 , which is around Trilliant have seen a surge in selling too, with 4Rm transact at $450k and 5Rm at $550k

3. Are there significant infrastructure growth plans in your neighbourhood?

With the help of URA Masterplan, you will be able to know what are the plans around your neighbourhood.

With news such as new MRT stations, new shopping malls, or new HDB BTO nearby, it will make it easier for you to market your EC. This will also help to improve your profit margin and safeguard you against any potential downside.

So, if you know that MRT takes 2 years more to complete, it might be a better bet to wait for it to complete before you sell and it would mean better selling price and better margins.

4. Are you in a downturn, do you need to improve your finance?

Generally, in down markets, you should only sell if you’re in urgent trouble (e.g. job loss) or to capitalise on getting funds to finance your purchase of another property at a discount.

ECs generally do not correct as much as private property as the fundamental reason for holding EC is for owner stay. So there is really no hurry to sell your EC, unless you want to upgrade and buy a better unit at large discounts.

For example:
In a downturn, when prices are correcting, usually the bigger or more expensive property will correct more, as investors are likely to bail out.

Eg. If market is correcting at 20%

So if you are holding to a EC worth about $1.25 million , you might want to sell to take advantage of a sale of a bigger unit worth $2 million but is going at $1.6 mil now.
When a recovery returns, you will benefit more with this new property than holding on to your existing EC through the crisis.

CONCLUSION :

In conclusion, we must view MOP of EC from many angles.

It is not a magic number to say you have to sell it after 5 years MOP.
This should not be the case, we should sell the EC only based on many other reasons as discussed above. It should be base on both market fundamentals and your objective to sell.

It must be clear and well thought process , with all the family needs and priorities being taken care of.

If you are buying another private property, (either new launch condo or resale condo) after you sell your EC, then it is easy.

But if you intend to buy another government subsidized unit, you have to wait out for another 30 months after selling your EC before you can submit a new application to buy any of the following.

1. A new flat from HDB.
2. An apartment under the Design, Build and Sell Scheme (DBSS) from developers.
3. Another EC from developers.
   If you have any further queries on how or when to sell your Executive Condo, you could reach me at mobile 91092177 or simply email me at rickfoknh@gmail.com.

I would be most delighted to share with you more. Thank you.

Article contributed by Rick Fok

Rick Fok is a realtor with OrangeTee & Tie Pte Ltd. He has been in this real estate business for 9 years.  He is very focus in helping his clients rent properties and he does help many customers to buy new projects according to their needs.  His interest include sports such as running and soccer besides just real estate work. He loves to connect with people to discuss properties related issues and gets enormous satisfaction in helping them fulfill their needs.  If you have any queries on this topic or other , please do give Rick a call and we can discuss this over a cup of coffee.

Other Articles to read

Is it better to buy an EC than a condo ?

Sell HDB and buy 2 condos

Buying a new launch or a resale property. Which is a better property for investment?

Do you keep or sell your HDB , when you upgrade to a condominium.

IS YOUR HDB AN ASSET

This is the most common question in the head of all HDB owners.  Is my HDB worth anything in the future? Is my HDB an asset for future earnings?  We all like to treat our HDB as a asset.  But unfortunately, HDB has an expiry date,  HDB are all based on 99 years lease.

And as the HDB becomes older, the remaining years till 99, will become lesser.

Your HDB value will get worse each year as the 99-year leasehold shortens. And the longer you stay in your HDB , the remaining value will diminish.  To make things worse, when the remaining leasehold of your HDB is fewer than 60 years, it becomes harder to sell. Because CPF usage is restricted further and bank loans are tightened for purchasers buying properties will less than 60years of Lease remaining.

And with restrictions on PR to stay in Singapore for 3 years before they can qualify to buy a HDB, this will dampen the demand for resale properties too.

According to the HDB resale price index, we have seen a decline in HDB resale prices since 2014.

HDB RESALE PRICE INDEX

Based on the latest HDB flash report, the Housing Board resale prices were flat in the first three months of 2020,  as compared with the last quarter of 2019.

The resale prices for 1^st quarter was flat, 131.5 after two consecutive quarters of increase in 2019, with 4^th quarter reported 131.4 and 3^rd quarter reported 130.9.

The HDB has offered many new BTO flats last year, 4571 units in Nov 2019 and 3373 units in September 2019.

And in upcoming May, HDB will offer about 3,700 Build-To-Order (BTO) flats in Choa Chu Kang, Pasir Ris, Tampines and Tengah.

In August 2020, HDB will offer another 4,100 BTO flats in matured towns Ang Mo Kio, Bishan, Geylang, Tampines and non matured town Woodlands.

With so many BTOs, buyers will have many choices to select and may not look for resale HDB, thus may cause a drop in demand for HDB resale.

With all these in mind,  it is not good to treat your HDB as an asset or an investment.

For it to become an investment , the HDB property must be

• Able to generate positive cashflow, or pay us money in form of rentals
• Able to generate Capital Appreciation or growth in value when we resell the unit
• Provides us leverage for value, eg. Mortgage equity

Generally, many have used properties as a financial asset to hedge against inflation and to track growth in the country. When a county performs well economically, usually the properties prices will move along with it.

Many fast developing nations, like HK, S Korea, and Singapore have benefited from this growth.  But moving forward, future growth is not so fast, and we cannot expect such growth rates as before and hence we will not see similar price gains in properties.

Hence it is no longer possible to buy a resale HDB and expect a sizeable profit in the near future.

Recently, there has been a lot of noise about HDB flat reverting to zero value and return to government at the end of their 99 year lease.

Based on theory, it is true the HDB units will revert back to HDB when their lease expires. We are still waiting for official reply from the government , will there be a lease renewal policy or will it offer rehousing policy to those whose units expires.  This uncertainty has to be resolved by government to put the HDB buyers at ease.

And there are a growing number of old HDB flats with mounting depreciating values,  where owners are holding to properties which are near the halfway mark of their 99 year lease.

The long held ideology that HDB is not just homes but appreciating assets was implanted in us during the campaign of asset building with HDB by the Government.

But today this is not true, old HDB flats are driving many to think otherwise.

Although HDB is a necessary asset, because we need a place to stay. If we don’t buy a HDB we have to rent a place and either way, it is money spent, so it may as well be spent on your own HDB. 

So, all homebuyers has to view HDB as homes and not as investments.

Because of this viewpoint, the Government will not allow ageing flats to be ignored.  The government is committed to maintain and upkeep all HDB regardless of age through HIP or MUP programs. The Government will not allow general degradation of HDB.

As such the Government has recently introduce some measures to encourage buyers to buy old HDB properties.

Included in this measure are new enhanced housing grants (grants up to $80,000) for first time buyers and raising income ceiling for all eligible HDB buyers (new cap $14,000).

Starting from May 2019, Home buyers can draw more from their Central Provident Ordinary accounts to buy old HDB flats, provided the property’s remaining lease covers the youngest buyer till the age of 95.

HDB buyers will also be entitled to Housing Board loan of 90 per cent (maximum loan) of the property price and max CPF usage of 100% valuation.

This new move by the Government is a new shift to focus on whether the property can be a home to the owner for life, instead of focus on its remaining lease.  This move will ensure that the HDB home buyer will have a roof over their heads in their old age.

Because old HDB property flat price depreciates over time,  it is advisable to get one with more remaining years, because when add to your age, it must be able to cover the youngest buyer till 95 years.

Buying an old HDB flat with the view that it will fall into SERS is not correct thinking. Because there is no guarantee that SERS is happening to all old properties.  Our Singapore minister has already said that SERS, Selective EnBloc Redevelopment Scheme, is not a guarantee issue.  In fact only 4% of all HDB built are selected for SERS , said Mr Lawrence Wong, Minister for National Development.

With all these in mind,  HDB may not be an investment or an asset.

Because an asset is one that will put money into your bank,  it will generate income for you.

PROPERTY WEALTH PLANNING

So, it is best to consider Property Wealth Planning (PWP) strategies to maximise and deploy their funds to work for them.  So what is PWP and how does it work ?  It is basically unlocking your dormant capital and convert it into active capital or income generating capital.

One way is to sell your existing HDB and use the sales proceeds to buy 2 condo, one for own stay and another for rental investment. It can be from new launch condo sale or from resale condo.

Example : If John Teo (35yrs) and his wife (32 yrs) has a HDB 5 room

He could sell it

House value at                    $620,000

Outstanding loan               $200,000

Sales Proceeds :                  $620k – $200k = $420,000

Assuming return CPF        $260,000

Net Cash                               $160,000

Current HDB instalment   $1,815 per month (Borrow $400,000 @ 2.6% over 25 yrs)

John allocates his sales proceeds money into 2 properties.

His monthly instalments is easily covered with his rental income and his CPF contributions

It is a very good time now to sell the property despite the COVID 19 situation.

Property prices have been gradually increasing month on month.

New home sales has been doing very well since beginning of year. In Jan, there were 618 units sale and in Feb 2020, new home sales jump 57.3% or 975 units.

Even IMF has reported that they expect a sharp rebound to follow after the corona virus pandemic.

CONCLUSION:

HDB is not really an asset to make money, although there may be capital gain if you have bought your HDB more than 10 years ago.

HDB is merely for home stay. But it can be monetized after 5 years MOP.

You can then use the sales proceeds to buy condo for your own stay.

When you sell your HDB, you are required to return to CPF, the accrued interest for the amount that was withdrawn for housing. So if you decide to delay in selling your HDB, means you stay longer and you incur more accrued interest.

With reduced appreciation of HDB and the increasing accrued interest, it would mean you will receive less cash proceeds upon selling.

Hence it will be a good time to convert your HDB asset into a real income asset. With good Property Wealth Planning, you could be a owner of 2 new condos, do call me , Rick at 9109 2177 for a discussion.

Article by Rick Fok

Rick Fok is a realtor with OrangeTee & Tie Pte Ltd. He has been in this real estate business for 9 years.  He is very focus in helping his clients rent properties and he does help many customers to buy new projects according to their needs.  His interest include sports such as running and soccer besides just real estate work. He loves to connect with people to discuss properties related issues and gets enormous satisfaction in helping them fulfill their needs.  If you have any queries on this topic or other , please do give Rick a call and we can discuss this over a cup of coffee.

Other Articles to read

Is it better to buy an EC than a condo ?

Sell HDB and buy 2 condos

Buying a new launch or a resale property. Which is a better property for investment?

Do you keep or sell your HDB , when you upgrade to a condominium.

Is it better to buy an EC than a condo ?

What is an Executive Condominium (EC) ?  Executive Condo is a hybrid of public and private apartment. It has both the attractive price of public housing and the superior comfort of private condominiums combined together.

EC are physically very similar to condos , it has all the facilities similar to a mass market condo. So is it better to buy an EC than a condo since it is so similar ?

EXECUTIVE condominiums (ECs) was first introduced to cater to the aspirations  of the sandwiched” class. This group whose household incomes have exceeded the ceiling for public housing ($14,000), but are not yet able to stretch to afford a private condominium, are being served by this new EC segment.

The EC has become an increasing choice for many Singaporeans of this sandwich class.  But for some people whose finances can allow a choice between an executive condominium and a private one, then the choice decision is much tougher.

WHO CAN BUY A EXECUTIVE CONDOMINIUM, WHAT IS THE QUALIFICATIONS ?

Not everyone can buy a EC, as it comes with many restrictions, this is necessary to ensure that only the sandwiched class is able to afford better housing.

To qualify for an executive condominium , you must meet these conditions

1. You need to meet the HDB Eligibility Scheme such as Public Scheme, Fiancee Scheme, Orphans Scheme or Joint Singles scheme.
2. Your total household income must not exceed $16,000
3. You must be at least 21 years old and is a Singaporean citizen, or with at least one co-applicant being a Singapore citizen
4. You do not owned any private property both locally or overseas, or you have not disposed of your private property within the last 30 months.
5. You have only bought 1 of new HDB/DBSS/EC before, and received 1 CPF Housing Grant thus far
6. You must meet the Minimum Occupation Period (MOP) of your current flat/EC unit.
7. EC buyers are also subject to the Mortgage Servicing Ratio (MSR). MSR is implemented to prevent EC buyers from taking on loans that may put them in risky financial situations. The MSR cap for purchase of EC is set at 30 per cent of a borrower’s gross monthly income.

Executive condominiums is a hybrid that has the same physical attributes of a private condominium, there will be swimming pool, gym, outdoor area, tennis courts and security and other facilities.

Executive condominiums are state subsidized and were designed for home ownership instead of being investment instrument.

The buyer must stay in the unit for at least five years before it can be sold to Singaporeans or PR only. And after 10 years, the unit can be sold to anyone, just like any other private condominium. This minimum occupation period is implemented to prevent any property speculation or selling quickly to reap profits.

Benefits of owning a EC , and why it is better to own a EC

1. Executive condominium are designed and built by private developers , just like private condominium.  It is designed with quality facilities and security, giving all residents a luxurious and quality lifestyle.

• EC are built on GLS government land sales specially reserved for EC. This is sold to private developers at a lower price, which translates into cheaper selling price to the EC buyer.

• For all first-timer applicants, you are eligible to receive housing grants of up to $30,000.

• Executive Condo unit can be resold as private condo, after 5 years MOP,  to Singaporean and PR and after 10 years it can be sold to anyone.

• EC will generally get a higher capital appreciation in future, because they are sold like private properties although they are bought as subsidized units with grants. And a larger pool of potential buyers to tap on after the privatization of the EC.

• Executive Condo also can be rented out like any other private condo. It has facilities like a condo , and it can give relatively good rental yield.

What is a Private Property

A private property can be landed or non landed condominium. It can be either brand new launch condo or resale condo. A condominium is a form of private housing which is co-owned by many strata owners. A condo has many common facilities such as swimming pool, tennis courts, gym, spa, park, and outdoor area commonly shared by all strata owners.

Main difference of private condominium vs executive condo are :

• Private property purchase do not enjoy any form of housing grants
• Private property are usually more expensive than EC or HDB
• Private property projects are only paid with progressive payment plans
• Private property can be bought solely for investment with no need for MOP or owner occupation. 
• Private property has no restrictions on foreign ownership , all can buy private property.
• Home financing is regulated by TDSR, all mortgage finance must apply TDSR 60%

A condominium purchase will require a significant cash outlay from Buyer. 

• 5 per cent for the option to purchase
• 15 per cent in cash or CPF when you exercise your sale and purchase agreement
• 5 percent for progressive payment, if your maximum loan is 75 per cent.
• 4 percent Buyer stamp duty
• Lawyer legal fees.

As the cash component is quite high, only those who are financially stable will consider private property purchase. Others who are tight cashflow may consider EC instead.

One major factor attracting many buyers to EC is the price.  EC are price relatively cheaper than private condo because of the many criteria imposed by HDB on EC purchases. Price could be as much as 20% lower. And to add to this, EC Buyers can get a grant from HDB, if they are first time applicants to EC, this makes buying EC more affordable.

ECs can be a better investment choice compared to private condominiums, as they are usually sold for around the same price as private apartments in the resale market even though EC are purchase with grants (subsidized housing).

EC are treated as HDB property for 10 years. During this period, it is subjected to the same restrictions eg. Minimum occupancy period of five years, and restrictions on who can buy EC.

Because of cheaper land cost and construction cost, Executive Condo or EC have been priced lower than private properties. But recently, the narrowing gap between prices of the new ECs and OCR mass market condos  is making this price difference less attractive.

The latest new EC launch, Piermont Grand and OLA, has seen prices come quite close to that of some new projects in the OCR during the first half of last year. New projects such as Riverfront Residences Sengkang, Parc Botannia Sengkang, and Treasure Tampines have all seen psf price at around $1250 to $1300. This narrowing price gap between new EC projects and OCR condos, has affected many HDB owners who are looking to upgrade.

ECs has become a rare commodity, as the supply of EC have being reduced in recent years. And because of limited land availability, the prices also have been driven up.

Recently, the potential supply of ECs is not able to meet the demand of buyers, because there were only four new EC projects in the pipeline.

• In 2019, there was only Piermont Grand, 820 units (Sumang Walk)
• In 2020, there were 3 EC . Parc Canberra, 450 units (Canberra Link), OLA, 550 units (Sengkang), Parc Central, 695 units (Tampines Ave 10)

This dwindling supply of EC has driven up prices to historical highs.

The government’s take on releasing more land for EC construction is a major factor that is affecting prices of new ECs. As you can see from the charts , new ECs are quite limited in supply.

While New housing measures, such as Enhance CPF housing grants are expected to make public housing more affordable and accessible for Singaporeans. The affluent buyers with significant cash savings will buy private condominium as the market has stabilised and it does not have MOP restrictions.

Conclusion :

While all upcoming EC developments are expected to be priced higher, they are still excellent value, because of their location and potential for growth.

Piermont Grand at Sumang Walk and OLA at Anchorvale Crescent sites will both benefit from the Punggol Digital District, a government initiative to transform the business and urban landscape of Singapore. This is a big initiative involving Digital businesses, top academia and the high-tech lifestyle, it is a key growth cluster in the North East Region, expected to create 28,000 new jobs.

Parc Canberra, The Canberra Link development is near Canberra MRT station and Woodlands Regional Centre. Parc Central, the EC at Tampines Avenue 10 will benefit from the upcoming Changi Terminal 5 development as well as the established Tampines Regional Centre.

ECs are still good value buys and a good option for the sandwich class and HDB upgraders.

From a pure investment angle, the private condo proved to be the better buy, because the EC regulations forbid the renting out of entire unit in the first 5 years MOP, and hence you cannot offset monthly mortgage payments with rental income. But if rental restrictions are change, then EC may outperform private condo.

Although the gap is narrowing, there is still a significant price gap between EC and private condo. And EC still provide an affordable option for HDB upgraders who want a higher standard of lifestyle. As EC is for own occupation, achieving a good resale capital appreciation after privatization is good for investment.

For more information , do leave me comments or make a e-appointment to discuss this in greater detail. Thank you

Article by Rick Fok

Rick Fok is a realtor with OrangeTee & Tie Pte Ltd. He has been in this real estate business for 9 years.  He is very focus in helping his clients rent properties and he does help many customers to buy new projects according to their needs.  His interest include sports such as running and soccer besides just real estate work. He loves to connect with people to discuss properties related issues and gets enormous satisfaction in helping them fulfill their needs.  If you have any queries on this topic or other , please do give Rick a call and we can discuss this over a cup of coffee.

Other Articles to read

Is your HDB an asset ?

Sell HDB and buy 2 condos

Buying a new launch or a resale property. Which is a better property for investment?

Do you keep or sell your HDB , when you upgrade to a condominium.

SELL HDB AND BUY TWO CONDO. HOW IS THIS POSSIBLE ?

It is the common goal of many HDB owners to upgrade to condominium. Their main reasoning is that condo comes with facilities and they can enjoy and upgrade their lifestyle. When approached by client to do this,  I will first check on their financial feasibility and sometimes may even advise them to sell HDB and buy 2 condo instead.

How does sell HDB and buy 2 condo work ? Well, it is to sell your HDB and use the proceeds for down payments for 2 new condos.  Under this “sell one & buy two” strategy, the seller is urged to sell the HDB to capitalize on capital appreciation and use proceeds to buy 2 condo units (1 big and 1 small condo).

The name of one spouse is used for the big condo for family occupation and the other spouse name is used for the smaller investment property which is to be rented out.

Sell HDB to buy 2 new condos

By using the 2 individual names to buy 2 condos, we have avoided the issue of ABSD for the second property.  By the power of leverage, we can sell one property and borrow enough money to buy two condos. This 2 purchases are done by using a combination of cash and CPF monies.  

Assuming the mortgage on the investment property is partially funded by CPF monies, while the rental income covers the balance, there is the possibility of positive cash flow. This will give passive income to the seller.

By adopting this strategy to sell HDB and buy 2 condos, you will gain the following.

1. You save thousands for not paying ABSD

If you buy a new launch condo and keep your existing HDB, or buy 2 condos with both names you have to pay 12%  Additional Buyer Stamp Duty (ABSD).  Eg. If you buy a $1 million investment property you have to pay $120,000 tax.

That is equal to 4 years or 48 months of rental income if you will to rent HDB out for $2500.  It is better to use this money to pay as downpayment for your 2nd condo under a different name.

2. It works against Inflation

Real Estate is the best choice against inflation. It is not just the increase of the resale value of the property over time, but the property can be used to generate rental income.

However, if you own only HDB flat, it is merely for own stay, but not used to hedge against inflation. While if you buy 2, you can have one for own stay and another for rental income.

3. HDB Flat is Aging, and lose value

It is good to sell HDB especially if the property is already old.  Because for the purchase of any residential property less than 60 years remaining lease, the maximum amount of CPF that can be used is capped at a percentage.

You cannot use their CPF fully, you will need to pay part of it by cash. That’s why those older flats couldn’t fetch a good price despite having a superb location and even well maintained.

4. Widening gap in price index: HDB vs Private properties

Private property index has gone up sharply in recent quarters but the HDB resale index has continued downwards.

With condo price going higher and HDB price going lower,  it is good time to sell HDB and buy condo. This will give you more future value to your new condo acquisition.

5. Flexibility to swap between your 2 Condo based on Your Own Needs. Enjoy the Condo Facilities and Lifestyle

You see, when you own 2 properties, you can stay one and rent out one. You have to stay in the bigger one while your children are still young. So you choose to stay in the 3 bedders and rent out the 1 bedder.

But when your children grow up and form their own family in the future, you will have 2 vacant bedrooms. That’s the time you may consider to move to the 1 bedder and rent out the 3 bedders. This will be when you can really retire comfortably.

Before we embark on this strategy we must understand the concept of it.

Concept 1: Understand the amount of monies entering your CPF accounts

If you are working on a monthly salary, you will receive CPF contributions from 2 areas:

• 20% from employee (you)
• 17% from employer 

These monies are then split and put into your:

• Ordinary Account
• Special Account
• Medisave Account

How it is split will be dependent on your age . 

These monies are sitting quietly in your CPF accounts, earning the 2.5% interest in your CPF Ordinary Account,  subject to CPF Board’s terms and conditions. 

Is it a better way to utilize these CPF monies and invest in properties where they can work harder to earn returns

Concept #2: “Freeing up” the CPF monies to channel into your 2 new properties

The concept of selling your HDB flat will free up more CPF monies for you to channel into your 2 new properties. 

It is interesting that people often forget how much money they have paid into their HDB flat since they first bought it. It could be a substantial amount, maybe hundreds of thousands.

Especially if your flats have appreciated in value, it will “free up and unlock” more funds than what you originally put in.

For those flats that didn’t appreciate, it may result in a negative sale where you might not be able to get any money from a sale.

That is why you need to get expert advice on a detailed financial calculation

Concept #3: HDB Flat Valuation

The HDB flat valuation is important as it determines the selling price and eventual cash proceeds. This is usually done by buyer of HDB flat to get HDB loan. 

The value of the flat can be estimated from similar transactions that has occurred within the same block or nearby vicinity. 

With this valuation, you will be able to get enough cash proceeds to buy 2 properties

• Amount of CPF monies available from husband and wife
• Amount of investable liquid cash available

If all is well, you should have more than enough to proceed to purchase 2 properties under 2 different people’s name.

Property A will be under the husband’s name.

Property B will be under the wife’s name. 

One of the properties will be the matrimonial home while the other is rented out for passive income. 

How does “sell one buy two” work?

It mainly works through the power of leverage. To be more precise, it means you need to “sell one and borrow enough money to buy two”.

Disadvantages of this scheme

With job security at stake amid slowing economy, MAS warns of risks involved.

• Amid a slowing global economy, being laid off is a possibility and the property’s value depreciating are real possibilities. Both these scenarios will cripple the couple’s ability to service two mortgages at the same time. Property purchases are significant and long-term commitments, the investor or buyer need to be aware of the risks involved.

• In order for this strategy to work, both buyers must continue to work to have sufficient income to service their individual property loans. Should one spouse lose their job, it could place strain on the family to service two mortgages at the same time.

• In any property purchase, there is a need for substantial upfront cash, the buyer has to consider whether they have sufficient savings to pay for all the relevant stamp duties and cash down payments before making property purchases.”

Another potential issue as pointed out by Propnex’s Mr Ismail, is that “Property investments are illiquid. You can’t cash out tomorrow. In the event of a downturn, you may not be able to find a tenant.”

That is very true, you cannot cash out immediately, and because of uncertainties in the global economy you may not be able to find a tenant to help pay the mortgage of your investment property.

So it is best that buyers do not plough all their savings or cash reserves into the investment property purchase, but instead do maintain cash reserves amounting to at least one year’s worth of mortgage instalments as a safety buffer.

By selling your HDB and buying 2 condos, you have to remember that condo purchase do include the following

1. When you’re buying a private property, you have to take a bank loan.

With economic uncertainties, bank interest rates fluctuate, so make sure you can service the loan when they go up.

Unlike an HDB loan, bank loan rates fluctuate. They’re now hovering around two per cent per annum, but historically, the average is around four per cent. And since they’ve been at historical lows for around a decade, there’s little room to move except to go up

2. Two people sharing a mortgage is a much smaller burden than each one taking on their own loan.

When you buy 2 properties with the cash proceeds from selling your HDB, you have to take 2 loans for buying 2 new properties.

The sum of these 2 loan mortgage quantum can be quite high and may take out huge chunk of your family combine income..

For Hubby – Buy a 3 Bedroom condo for own stay

• Assume purchase at $1,500,000.  At 2 % per annum, a mortgage loan 75% is $1,125,000
• Assume loan tenure of  25 years, mortgage is about $4,763 per month.

For Wife – Buy investment shoebox unit for rental

• Assume purchase at $800,000, At 2% per annum, mortgage loan 75% is $600,000
• Assume loan tenure of 25 years, mortgage is about $2,540 per month. 

You must be prepared to pay $2,500 plus maintenance fees (est $300 ) whenever your unit is untenanted.

Conclusion

Is the concept of selling your HDB to buy 2 condos a good idea?

In short, “sell one buy two” can work, but only for those who have done very well for themselves since the time they first bought their flat (or maybe they sold their flat for a million dollars).

With private property prices increasing at a faster rate than wage growth, property experts are saying that the affordability gap for private homes could further widen for Singaporeans.

While median asking prices of private property have risen by 12 per cent in the last three years, monthly wages have increased only by 7 to 8 per cent over that period based on Ministry of Manpower figures.

Hence it may be a good idea to capitalise on selling your HDB and buying into private properties when you can afford. Perhaps, you should take this route of “Sell HDB to buy 2 private properties” only  if you have a really comfortable budget for mortgage and at least 20 year investment horizon.

Though the strategy is not a new one, many buyers are now keen to go for this strategy or to find out more about it given the double-digit ABSD if you buy a second property. I must say again that this strategy is not for everyone. “You have to be financially stable. Both (spouses) have to have fairly high income,” to service the loans, and it must be done with a perspective that property ownership is for the long-term.

Article by Rick Fok

Rick Fok is a realtor with OrangeTee & Tie Pte Ltd. He has been in this real estate business for 9 years.  He is very focus in helping his clients rent properties and he does help many customers to buy new projects according to their needs.  His interest include sports such as running and soccer besides just real estate work. He loves to connect with people to discuss properties related issues and gets enormous satisfaction in helping them fulfill their needs.  If you have any queries on this topic or other , please do give Rick a call and we can discuss this over a cup of coffee.

Other Articles to read

Is it better to buy an EC than a condo ?

Sell HDB and buy 2 condos

Buying a new launch or a resale property. Which is a better property for investment?

Do you keep or sell your HDB , when you upgrade to a condominium.

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Buying a new launch condo or a resale property. Which is a better property for investment.

Buying a condo is always one of the biggest investment decision facing the buyer.

Whether you are buying a shiny new launch condo or a well maintained resale condo, the onus is on the buyer.  Is the buyer a first time landlord or a seasoned investor.

For those who are seeking a property to rent out, the buyer will be looking at many other criteria instead of just beauty. The investor will look at more numbers such as age, price , ROI, rental yield, or potential upside before deciding on a unit.

In the real estate market, the market is very dynamic, the prices of resale property is always up for negotiations while prices of new launch property is fixed by the developer according to market conditions.

Why choose a resale condo as an investment property?

Many investors prefer to start investing with a resale condo. This is because resale route does provide a few big advantages:

• Immediate rental of unit is possible. I guess this is the most common reason for choosing a resale condo for investment purposes. As a new launch might take two to three years before it is ready to be able to rent out, whereas tenants can move into a resale unit immediately

• Also, there is a high chance for resale property to sell with tenancy. (that is the resale condo is already tenanted) , this will reduce the time loss in finding tenants.

• Most investors want to avoid paying the mortgage, this can be achieved by having sufficient rental income to cover mortgage repayments. As such, it is not surprising that some investors will choose resale units for investment.

If you intend to rent your condo out, buying a resale condo makes  sense because you will be able to rent the finished property out as soon as you buy it, and pay for the mortgage with your rental.

There is also the added benefit of using specialized leasing agents who help in renting out units.

A) RENTAL INCOME CHECK. To an investor,  It is relatively easy to predict the rental income of a resale unit. You can look at what the current (or past) tenants have been paying, or check out the URA website for Rental contracts of private residential properties.

By checking the website you can even look at rental income in the neighbourhood. Then you can compare the actual rental rates, for your specific unit or other unit sizes. This can help you ascertain the estimated vacancy rate.

To invest in Resale Condo,  the choice is simpler because the end-product is standing in front of you You can see and touch the resale unit.

B. BIGGER UNITS . Most buyers opt for resale unit because older properties are bigger in size, and layout is usually more spacious. This is particularly important if the inlaw or parents are staying with you,  the need for bigger room size matters and space between rooms is desirable to give space.

The set back for resale unit is that you may not be able to get units of your choice, such as unit numbers or unit facing or floor levels.  More patience or prudence is needed in resale unit selection.

For Resale Condo, there is a great chance of haggling for some great deals, especially in cases where the owner is in a hurry to sell, whether because of relocation or job loss.

C. DEFECTS . With resale units, you would have done your due diligence and have inspected the physical condition of the property before committing to a purchase. You should know what defects needs to be repaired, and have a contractor to quote renovation cost and time frame.

As for new launches, this comes with a defects-free period, but it may not compensate you as repairs or rectification works takes time and it might delay your plans in finding a tenant.

Furthermore, there is a risk that some defects are not possible to rectify and it become lasting problems. For example, if the garbage chute for the condo block is poorly designed (causing choking and foul smells), that may be a permanent issue that will affect rentability and resale value.

These sort of surprises are more easily avoided in a resale investment unit, provided you inspect the condo thoroughly before you buy.

Finally, with resale units, it is you buy what you see.  So you can gauge issues such as traffic noise, leakage or pest problems, or poor neighbours.  But for new launch , these sorts of issues are hard to predict, because they do not physically exist yet.

Why choose a new launch for investment?

There are many pros and cons in buying a new launch condo .  Of course the main factor against buying new property is the time line.  It usually takes 3 to 4 years before the property is available for vacant possession. This may hinder some investors choice if they cannot afford the waiting time or they prefer immediate rental returns.

The main reasons for choosing a new launch include:

1. First Mover Advantage.  Potential upsides are good due to the changing landscape of the area. If you purchase a new launch and the area surrounding it is still under development, there is potential for the property value to grow when the development and construction is completed. Resales in that area would then be of a premium level compared to initial stage.

2. Newer facilities and features . One main appeal of a new launch condo is that everything is new. No need to worry about worn down by use in case of resale units. This newness does have an impact on rentability. Many tenants prefer a new condo where everything is new and clean.  Newer condos also have more features that older ones do not. For example, smart homes technology which allow the resident to control elements of the house.  For new properties, it has a warranty period, guaranteed by developers to rectify any defects.This usually last for 12 months, after obtaining the TOP. Resale apartments do not have this advantage, and for resale you get what you see.

3. Different payment methods. New launches offer different payment methods as compared to resale condo. The most common methods is Progressive Payments, this is a form of payment for properties that are still under construction. For buyers who do not have sufficient cash this method is good because you pay only a percentage of the total cost, 5% deposit and 15% on exercising deal. Thereafter the amount can be settled by mortgage payments if you are buying 1^st property.  This means a lower entry point when it comes to investing.

4. Discounts.  Usually for new launch condo, developers will offer some discounts such as Star Buy units, early bird discounts, absorb stamp duties and other promotional discount to attract buyers. You don’t get this from resale units.  And most importantly, buyers do not have to pay any agents commission for the purchase of new launch units, it is all borne by developers, that is a huge savings to buyers.

5. Lower maintenance costs. For resale unit or older condo, the maintenance costs tend to be higher. This maintenance cost is higher for both within unit and communal areas. Within your unit, older resale condos may have issues such as choked plumbing, yellowing walls, damp ceilings, spoilt water heaters, all these require repairs.   

New launch condos do not have these problems; and it is protected by warranty from developers over a one-year defects-free period. Outside your unit, there is the issue of monthly maintenance costs.

• Wider range of unit choices . With resale condos, you can only select those units that are on sale. With new launches, you typically choose your unit (subject to ballot). By being able to choose unit means you can select units that you know are easier to rent out, eg. units with a better facing, better unit number, better floor level

Alternatively, you could also look at Ready-to-move-in properties from developers. These are new units that are not yet sold upon the project’s completion. These are usually a few remaining units available, and they are ready to move in when the ownership paperwork is completed. Compared to new projects or sub-sale units, ready-to-move-in properties is less available as most projects are sold out by the time they are TOP.

Conclusion :

So, which is a better investment property. Buying a resale property or a new launch condo?

Here’s some more reasons in favour of new launch condos. 

• Budget:  New launch condos can be bought at the developer’s price, cutting out the agent’s commission in the process. This saves you a lot of money since the developer foots the agent’s bill.

• Facilities: New launch condos have more facilities and better varieties to offer as compared to resale properties. Also, for resale properties, the common areas tend to be a little worn out and dated.

However,  if you are not willing to wait for new launch properties to be constructed and want to have a rental unit right away, then pick a resale condo as a new property always carry uncertainties in timelines and project delays.

As mentioned before resale units are less risky. You can see actual unit and the current rental rates for a resale unit, and physically inspect the property. That there is also a transaction history for you to check helps you reasonably estimate capital appreciation and rental yield. Hence this is suitable for new landlords who are not used to rental calculations.

As for new launches, it is slightly more suited to seasoned investors, because it carries more risk and future projections of rental income.

You need to estimate the unit’s probable rental yield, appreciation and overall appeal. You must possess a certain level of acumen, and a good ability to read the location before the property is built.

And for new launch,  you are paying the mortgage even before you have a tenant, so any mistake in investing in a new launch unit will be much more expensive.

Article contributed by Rick Fok

Rick Fok is a realtor with OrangeTee & Tie Pte Ltd. He has been in this real estate business for 9 years.  He is very focus in helping his clients rent properties and he does help many customers to buy new projects according to their needs.  His interest include sports such as running and soccer besides just real estate work. He loves to connect with people to discuss properties related issues and gets enormous satisfaction in helping them fulfill their needs.  If you have any queries on this topic or other , please do give Rick a call and we can discuss this over a cup of coffee.

www.newlaunchsales.com

Other Articles to read

Is it better to buy an EC than a condo ?

Sell HDB and buy 2 condos

Buying a new launch or a resale property. Which is a better property for investment?

Do you keep or sell your HDB , when you upgrade to a condominium.

Do you keep or sell your HDB , when you upgrade to a condominium.

Many of the Singaporeans will start out with buying a HDB flat as their first home property.

And when they upgrade to a private condominium in the future,  they are faced with this impending question, to keep or to sell their first matrimonial home.

Before anyone can answer this, we have to look at how it work out financially for the couple and reasons to why they intend to keep the property.

What is your objective in buying this second property, is it to earn rental income from either the HDB or the condo.  If it is for investment, will the rental income be able to service the mortgage loan?  Will it have a drastic impact on your finance, if you are unable to find a tenant.

If you intend to rent out the HDB and move into the condo, the important factor to consider is to consider the potential income versus the additional expenditure incurred (ABSD).

Eg. To rent out existing HDB at $2,500 per month or $30,000 per annum.

Assuming the new private condominium 3 Bedroom unit is priced at $1,500,000, then the ABSD 12% is $180,000, if we divide it by $30,000, it will need 6 years rental income to recover the ABSD costs incurred.

The key important factor to consider whether to keep the HDB and pay ABSD, will be “is it worthwhile to forgo 6 years rental income to keep this HDB flat”.

Besides calculating the potential rental yield, you must also consider the potential capital appreciation, and determine the probable Return On Investment (ROI). This should then be compared to other investment options, such as bonds or equities to decide whether an additional property asset is beneficial to your investment portfolio.

You should have a strategy in place for the second property

• How long you will hold on to it (does buyer intend to sell for a profit after five years, or to hold on to it and collect rent for 30 years?)
• When and how you will cut any losses (if the property becomes a liability due to low rental income, how long will buyer hold on to property before selling it off?)
• What is your expected capital gain after holding on for 5 years. (what’s a “good price” at which you aim to sell the property?)

Most importantly, If you think about buying a new condominium while still owning a HDB flat, you may want to consider the following financial obligations.

1. Fulfilling your Minimum Occupancy Period. – The law states that you are required to physically occupy your flat for Five (5) years before you can sell it on the open market.  It excludes any period where you do not occupy the flat, such as when the whole flat is rented out or when there has been an infringement of the flat lease. You cannot concurrently own a HDB and buy a private property during the first 5 years of your stay in the HDB flat you’ve bought.  For Singaporean, after you have purchased your new condominium, you may choose to keep your HDB, but for Singapore PR, you must dispose of your HDB flats within 6 months of buying the private property.

• Additional Buyer Stamp Duty (ABSD) –  If you are a Singapore citizen, you will incur an additional buyer stamp duty of 12% on your second private property purchase. This is on top of the normal Buyer Stamp Duty of 3 or 4 %.

• Total Debt Servicing Ratio (TDSR) – From June 2013, the government introduce TDSR, to encourage home buyers to borrow within their means.  It was part of the cooling measures to prevent borrowers from being over-extended with their home loans.  The current rate for TDSR is at 60% of your gross monthly income. It means you cannot use more than 60% of your income to service your total loans ( that includes car loans, home loans, and credit card expenditure).  So if you are buying a second private property, you have to consider how TDSR will affect your borrowing and whether you have sufficient funds if you decide not to sell your existing HDB.

• Loan to Value (LTV) bank loans ratio –  The new rules on LTV limit determines the maximum amount an individual can borrow from a financial institution (FI) for a housing loan.

• The maximum housing loan borrowers can take depends on their age, loan duration and property type, and whether they have existing housing loans. Joint borrowers are assessed using an income-weighted average age.

• The maximum loan tenure for housing loans is capped at:
  • 30 years for HDB flats.
  • 35 years for non-HDB properties.

LTV refers to the loan amount as a percentage of the property’s value. For example if the buyer borrows $750,000 to purchase a $1 million property, then LTV is 75%

As mentioned earlier, The LTV limits for individuals change depending on the number of outstanding/existing housing loans a borrower has.

 Effective from 6 July 2018

We will apply the lower LTV limit (eg. 55% for None Outstanding Loan) if the loan tenure exceeds 30 years (or 25 years for HDB flats), or the loan period extends beyond the borrower’s age of 65 years.

So, bearing this in mind, the buyer has to consider his LTV if he decides to keep the existing HDB when he buys a new condominium. If the existing HDB still has outstanding loan, then his new loan will be set at LTV 45%, or he has to set aside 55% in cash & CPF to buy the new private property. And it is subjected to a max of 30 years loan tenure or cap at age 65 years old for the borrower. So, the age of the buyer must also be considered if you are to buy an additional private property.

This is because the monthly mortgage and loan tenure for the property is calculated based on age. It is either they have fewer years to pay off the loan or they will have to borrow less or pay more per month based on their age.

Example : 

To summarize, if the buyer is a Singapore Citizen, and is considering owning both the existing HDB and a new private condominium, the biggest challenge to buyer is likely to come from the financial angle.

The buyer has to cater to the LTV, ABSD, and TDSR restrictions, the total amount needed to finance a second property will be a hefty sum.

With regards to use of CPF , if you buy a condo before selling your HDB , it is considered as a second property.  As such you can withdraw up to a maximum of 100% of the condominium valuation limit from your CPF Ordinary Account.

And you will need to set aside your CPF Basic Retirement Sum of at least $88,000 before you can use the excess CPF money in your Ordinary Account to purchase your new condo. This is applied even if you are below 55 years old.

Therefore you will need to have plenty of hard cash on hand, it will definitely bite of a huge chunk from the savings.

Do note that property tax is payable on both properties. That is the one that you live in as well as the one that is rented out based on Annual value of the property. The tax rates range from 10 to 20% depending on the annual value of the property. So if you are renting out the condo, at $4,000/month, your property tax will be around $5,500/year.

Conclusion:

The ultimate question to ask before deciding to keep the HDB or to sell the HDB before you upgrade to a condominium is

• Can you afford to keep the HDB you own as an investment to earn rental income
• Do you need to sell the HDB flat to get funds to buy the new condo

As I have explained earlier, financial affordability is crucial and it does affect the decision. You need to have lots of hard cash, if you intend to keep your HDB.

Eg. To buy a $1.5 million private condo. You will need to have more than $1 million in cash  & CPF

• LTV 45%, so you need 55% cash & CPF or $825,000
• Plus money for ABSD , another $180,000, and BSD $60,000
• Your minimum cash upfront at booking will be 25 percent

Keeping the HDB will not earn you high rental income based on current market conditions. The rental income is not enough to pay off your new mortgage amount.

It can only go towards offsetting the ABSD expenses that you have incurred.

And rental does bring along some tenancy issues and maintenance costs.

Lastly, there is another option, that is to upgrade to an executive condominium, then you will have to sell off your existing HDB under the HDB regulations. An EC will give you similar lifestyle as a condo and you must sell off your HDB thus saving you the hassle of deciding what to do.

Article contributed by Rick Fok

Rick Fok is a realtor with OrangeTee & Tie Pte Ltd. He has been in this real estate business for 9 years.  He is very focus in helping his clients rent properties and he does help many customers to buy new projects according to their needs.  His interest include sports such as running and soccer besides just real estate work. He loves to connect with people to discuss properties related issues and gets enormous satisfaction in helping them fulfill their needs.  If you have any queries on this topic or other , please do give Rick a call and we can discuss this over a cup of coffee.

www.newlaunchsales.com

Other Articles to read

Is it better to buy an EC than a condo ?

Sell HDB and buy 2 condos

Buying a new launch or a resale property. Which is a better property for investment?

Do you keep or sell your HDB , when you upgrade to a condominium.

Published on Propertyguru, by Fiona Ho, on 7 June 2019

The Government has acted to reduce private housing supply under the GLS programme for 2H2019 by 15% – here are 3 things we can expect next.

The Government has acted to reduce supply of private residential housing from confirmed sites under the government land sales (GLS) programme for the second half of 2019, due to a dip in buying demand after 2018’s property cooling measures and a large supply in the pipeline.

Five confirmed list sites and eight reserve list sites that can yield about 6,430 private homes, 92,000 square metres gross floor area (GFA) of commercial space and 1,100 hotel rooms were announced by the Ministry of National Development (MND) on Thursday (June 6).

With the cutback, supply of private homes on the confirmed list for 2H2019 of the GLS programme will fall by 15% to 1,715 units from the 2,025 units in 1H 2019.

What does this mean for Singapore’s homebuyers and the property market at large? Here are 3 things we can expect:

1) Home Prices To Remain Stable
The reduction in land supply for private housing units should ease supply pressure and provide support for property prices to stay firm, says Huttons Asia head of research Lee Sze Teck.

The cutback comes amid oversupply concerns, with roughly 44,000 private housing units in the pipeline. This comprises roughly 39,000 unsold units from GLS and collective sales sites with planning approval, and an additional 5,000 units from sites that are pending planning approval. In addition, there are around 24,000 existing private housing units that remain vacant.

In comparison, buying demand has continued to fall since the introduction of the property cooling measures in July last year, while transaction volume has declined for the third straight quarter in Q1 2019, and developers’ demand for land also moderated, MND said.

The cutback in supply is expected to even out the supply-demand equilibrium in the local housing market.

2) Developers To Focus On Smaller Sites
On the back of the growing unsold inventory, developers are observed to be restrained on high-unit yielding sites. This comes especially in light of impending additional buyer’s stamp duty (ABSD) remission rules on development sales success, says Desmond Sim, Head of Research at CBRE, Southeast Asia.

The latest cooling measures introduced a new, non-remissible 5% ABSD for developers when they purchase residential development sites (including en bloc sites). In addition, the remissible ABSD for residential developers has been raised to 25% from the previous 15%. If a developer fails to complete a project and sell all off its units within five years of acquiring the site, it will have to pay the 25% ABSD with interest. It is for this reason that developers tend to be more cautious when bidding for larger sites.

Out of the five residential sites in the Confirmed list, a new site along Irwell Bank Road was included, while the other four sites including an EC were transferred from the 1H2019 Reserve List.

Confirmed list of residential sites under the 2H2019 GLS Programme

Confirmed-residential-sites-GLS-H2-2019

Source: MND

One notable change in the 2H2019 Confirmed List was that the site on Canberra Drive that was on the Reserve List in 1H2019, has now been split into two sites – Canberra Drive (Parcel A) and Canberra Drive (Parcel B).

CRBE’s Sim views this as a positive move from the state planners. “The site dissection has made the sites (Parcels A and B) more palatable for developers to consider,” says Sim.

Meanwhile, Ong Teck Hui, Senior Director of Research and Consultancy at JLL, says that the Irwell Bank Road site within the prime districts stands out as an attractive prime site. “It is in the vicinity of numerous upmarket residential developments, including New Futura,” he says.

However, being a sizeable development that could generate 445 units, the absolute land price is likely to be high and developers are expected to be cautious in bidding for the site, given the oversupply in the prime sub-market, says JLL’s Ong.

3) More ”Entry-Level” Projects In The Pipeline
The two parcels at Canberra Drive (Parcels A and B) are sites that would generate entry-level private housing that would be in demand by HDB upgraders and first-time homebuyers, says JLL’s Ong.

Of the two, Parcel A appears to be the more attractive site, as it is regular in shape, smaller (220 units) and is more affordable. On the other hand, Parcel B is oddly shaped and is much larger (445 units). However, as both sites are located near the future MRT station at Canberra Link, there should be fair interest from potential bidders, he adds.

Lastly, the EC site at Fernvale Lane is likely to see healthy demand from developers as the supply pipeline for ECs, while increasing, is not excessive. However, bids may be moderated as supply is not as tight as before and market conditions could be less buoyant.

Published by Propertyguru, Fiona Ho, on 11 June 2019

’Location, location, location,” – we’ve all heard this phrase often enough to know of its importance. And indeed, it is the single most important factor to look at when buying property in Singapore, ahead of pricing and size, according to findings of PropertyGuru’s latest Consumer Sentiment Survey.

1 in 3 Singaporeans intend to buy property in mature District 15 (East Coast/Marine Parade). Here’s why.

‘’Location, location, location,” – we’ve all heard this phrase often enough to know of its importance. And indeed, it is the single most important factor to look at when buying property in Singapore, ahead of pricing and size, according to findings of PropertyGuru’s latest Consumer Sentiment Survey.

Our survey also found that 1 in 3 Singaporeans intend to buy property in mature District 15 (East Coast/Marine Parade).

Below are some reasons behind the area’s stupendous popularity.

1) Connectivity And Accessibility

While there’s no MRT station at the moment, residents in the East Coast can look forward to nine MRT stations on the upcoming Thomson-East Coast Line (TEL) which is due to open in stages from 2019 until 2024.

Already, residential projects in the area are observed to be reaping the benefits from these new MRT lines. For instance, new projects that saw the highest sales transaction volumes in district 15 from 1Q2018 and 1Q2019 are all located within walking distance from the nearest MRT station. 

They include: Seaside Residences (397m from Siglap MRT), Amber Park (268m from Tanjong Katong MRT), and Amber 45 (509m from Marine Parade MRT).

The trend is also seen in the secondary market. For instance, condo projects that had some of the highest resale transactions within the same time period were: Water Place, Sanctuary Green and Pebble Bay – all of which are located less than 400m from the Tanjong Rhu MRT station along the TEL.

2) Proximity To Popular Amenities

Due to its proximity to the East Coast Park, areas located within district 15 are packed with opportunities for exciting outdoor activities and water sports.

The East Coast Park is the largest outdoor recreation park in Singapore, with the stretch of coastline offering some of the most sought-after waterfront facing properties on the island.

The district also boasts an abundance of amenities in the area, including malls like 112 Katong Shopping Centre and Parkway Parade. Various eateries and restaurants offering multicultural cuisine can also be found around the East Coast Park.

Aside from being located close to various popular amenities, the area’s proximity to the Central Business District (CBD) and Changi Airport also makes homes near the East Coast Park some of the most coveted on the island.

3) Availability Of Various Schools In The Area

In recent years, homes in the East Coast have gained appeal amongst growing families, largely due to its proximity to landmark parks and green spaces, as well as with a new MRT line planned for the region.

The availability of schools for every stage ranging from preschools to tertiary institutions in the East Coast adds to the area’s popularity. They include primary schools like Ngee Ann Primary School, CHIJ Katong Primary and Tao Nan School.

Meanwhile, secondary schools in the area include Victoria School, St Patrick’s School and CHIJ Katong Convent, among many others.

It goes without saying that parents wanting to enroll their kids in any of these primary or secondary schools will have the benefit of proximity. The distance also cuts down on travel time quite significantly, providing a more pleasant overall living experience for both parents and their kids.

Content taken from
Fiona Ho, Digital Content Manager at PropertyGuru, wrote this story

The Glades Condo

The Glades has TOP and is Ready for Occupation.

Units selling fast, and not many units are left.

Actual Units are available for Viewing.

• 1 Bedroom 22 Units left
• 3 Bedroom 5 Units left
  
• 4 Bedroom last 4 units
• Penthouse = 9 units with only 2 units with sea view
• Dual Key units , last few available
  Last 47 Choice Units!

https://www.theedgeproperty.com.sg/content/9-new-condos-best-transport-connectivity?utm_source=Newsletter&utm_medium=Email&utm_campaign=9%20new%20condos%20with%20best%20transport%20connectivity

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Published by MAS , Media Release  on 10 March 2017

Singapore, 10 March 2017… The Government has continued to review conditions in the residential property market. It has determined that the current set of property market measures remain necessary to promote a sustainable residential property market and financial prudence among households.  However, we will make calibrated adjustments to the Seller’s Stamp Duty (SSD) and Total Debt Servicing Ratio (TDSR) framework, with effect from 11 March 2017.

Additional Buyer’s Stamp Duties (ABSD) and Loan to Value (LTV) Limits

2.     Transaction volumes in the private residential property market remain healthy. There is firm demand for private housing, in part because of current low interest rates and continued income growth. While the growth in outstanding housing loans has moderated, it is prudent for households to further build up their financial buffers to protect against future interest rate increases or any losses in income. The Government is therefore retaining the current ABSD rates and LTV limits.

Seller’s Stamp Duties (SSD)

3.     The SSD is currently payable by those who sell a residential property within 4 years of purchase, at rates of between 4% and 16% of the property’s value¹. The number of property sales within the 4-year window has fallen significantly over the years since this measure was introduced. The Government will therefore revise the SSD as follows:

a) Impose SSD on holding periods of up to 3 years, down from the current 4 years; and
b) Lower the SSD rate by four percentage points for each tier. The new SSD rates will range from 4% (for properties sold in the third year) to 12% (for those sold within the first year).

4.     The new SSD rates will apply to all residential property purchased on and after 11 March 2017. Details of the revised SSD rates are in the Annex.

Total Debt Servicing Ratio (TDSR)

5.     The TDSR framework aims to encourage prudent borrowing by households and strengthen credit underwriting standards by financial institutions. Under this framework, property loans extended by a financial institution should not exceed a TDSR threshold of 60%.

6.     However, some borrowers have given feedback that the TDSR framework has limited their flexibility to monetise their properties in their retirement years, i.e. to borrow against the value of their properties to obtain additional cash. MAS will therefore relax the rules to meet such needs. We will no longer apply the TDSR framework to mortgage equity withdrawal loans with LTV ratios of 50% and below.

Stamp Duties on Transfer of Equity Interest in Entities whose Primary Tangible Assets Are Residential Properties in Singapore

7.     The 2nd Minister for Finance will be introducing legislative changes in Parliament today aimed at treating transactions in residential properties on the same basis irrespective of whether the properties are transacted directly or through a transfer of equity interest in an entity holding residential properties. The intent is not to impact the ordinary buying and selling of shares in such entities by retail investors, where the entities are listed on the Singapore Stock Exchange. However, significant owners of residential property-holding entities or PHEs2  will be subject to the usual stamp duties when they transfer equity interest in such entities, similar to what would happen if they were to buy or sell the properties directly.

8.     The Stamp Duties (Amendment) Bill will be tabled in Parliament today to give effect to this policy intent. Further details of this measure are in the Bill.0

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7 Reasons Why Property Prices Won’t Recover Soon

July 20, 2015
By Property Soul (guest contributor)

There was a recent article in the Straits Times with the headline “Time to review property cooling
measures”. The argument is that as: i. Private home prices are down ii. HDB flat prices have dropped iii.
Oversupply has worsened iv. Rents have weakened v. Interest rates have risen vi. The real estate industry has shed jobs, it may be time for the government to review the cooling measures.
Many people fail to see that the government can only do so much to cool or stimulate the property
market. After all, it is an open market and there are many factors that can lead to the continual boom or
downturn of the market, such as supply and demand, the economic outlook, market confidence, etc.
I am re-reading James Rickards’s book The Death of Money: The Coming Collapse of the International
9/8/2015 7 Reasons Why Property Prices Won’t Recover Soon
Monetary System. Below are some new inspirations from this interesting read.

1. Regime Uncertainty
When the Singapore government finally decides to withdraw the cooling measures, it may do little to
help restore fallen prices.
Remember those government measures taken to stimulate the property market back in year 2005? The
loan-to-value limit was raised to 90%. But not many buyers were interested.
The “regime uncertainty” theory from Charles Kindleberger explains the reason behind the lack of
investment during the Great Depression:
“… even when market prices have declined sufficiently to attract investors back into the economy,
investors may still refrain because unsteady public policy makes it impossible to calculate returns with
any degree of accuracy … the added uncertainty caused by activist government policy ostensibly
designed to improve conditions that typically makes matters worse.”
From midJune, stocks in China tumbled 30 percent from their seven year high. Then the Chinese
government and Chinese brokerages suddenly announced drastic measures to revive the stock market.
The intervention might have saved the market from the brink of collapse and demonstrated how powerful and cash rich the government is (and compared with China’s $3 trillion reserves the money spent is just peanuts). However, the whole incident exposes the vulnerability of the fundamentals and further undermines the market confidence of the investors.
After all, who needs government to step in if a market is healthy enough to recover on its own?

2. Market Oversupply
With 24,800 vacant private homes, an additional 22,000 to be completed this year, and another 21,000 to be ready next year, what kind of population growth do we need in Singapore to absorb the surplus?
Like what Rickards says: “In the end, if you build it, they may not come, and a hard landing will follow.”

3. Wealth Effect
Rickards points out the fact that two asset classes – stocks and housing – represent the wealth of most
people (which is certainly the case in Singapore). When prices of stocks and properties go up, people
“feel richer and more prosperous and are willing to save less and spend more.”
It is a chicken and egg situation: Low borrowing rates and easy money make properties look affordable,
attracting Singaporeans to put more money in properties, thus driving property prices to new highs.
The same happens in reverse on the way down.
4. Wealth Inequality
The wealth effect only benefits the “haves”, not the “don’t haves”.
Wealth becomes heavily concentrated in the privileged class who own properties, or businesses who own a stake in the industry (property developers, real estate agencies, banks, brokers, etc.).
9/8/2015 7 Reasons Why Property Prices Won’t Recover Soon
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